Readers’ forum: VAT status of consultancy business supply

We have recently been appointed by a couple of unrelated UK companies both of which have a sole director-shareholder resident in the EU. In each case the non-UK director provides business consultancy services (standard rated on their own) to UK and EU businesses through the company. Company A has a UK resident employee which does some ‘fieldwork’ – such as approaching potential clients. The employee works from home using his own equipment (laptop etc). Company B owns an investment – UK commercial property let to third parties – alongside the said trading activity. Rental income is £30 000 a year.

The previous accountants managed to register the companies for VAT in the UK. While we have not seen a copy of the application to register the directors explain that the main aim of doing so was to provide credibility of the business operating in a prestigious...